Thousands of families on Universal Credit – the government’s flagship welfare reform programme – are being made to pay for childcare costs upfront, before waiting up to a month to be reimbursed. Increased costs during the school holidays mean parents are being forced to take out loans to cover the shortfall, or even give up work altogether. Hard pressed parents are having to find up to £800 extra to cover the cost of childcare this summer, driving many families into debt, new analysis by Save the Children reveals.
On the 3rd of July seven mums, including mums from Swindon, who have been pushed into ‘childcare debt’ as a result of the policy joined Save the Children to lobby Parliament, demanding that changes are made to Universal Credit before it is rolled out nationwide.
Sarah Church joined them in Westminster to offer support and to hear their stories. She said, “It makes no sense that childcare costs are keeping hardworking parents out of work. Universal Credit is meant to make work pay, but it’s having the opposite effect for parents on Universal Credit, predominantly mums. Having to pay huge costs upfront leaves these mums in debt, so they have my full support calling for change.”
Childcare costs increase during the school holidays, when many parents rely on holiday clubs or childminders while they are at work. Even parents of pre-school-aged children are affected, as they lose their free childcare entitlement during the holidays. A parent with a three or four-year-old who usually receives 30 free hours of childcare in Swindon could face an increase of £620 during the summer holidays.
This is on top of other spikes in costs throughout the year, which leave parents constantly playing catch-up. The different number of days in each month, for example, has left some parents regularly having to substantially more to cover increases in their monthly bills, while others say their childcare providers expect them to pay for whole terms upfront – money they just don’t have.
Latest figures from the House of Commons Library show that nearly 8000 households in Swindon are currently claiming Universal Credit, of which around half have children, meaning that there are potentially 4000 families suffering in ‘childcare debt’.
As more than three-quarters (78%) of low-income families with young children in England have no savings, Save the Children warns that frequent spikes in childcare costs will push many of these families into the red, or block them from going back to work – the very opposite of what Universal Credit is designed to do.